Manufacturing declines for third straight month - The Institute for Supply Management's factory index contracted to 49.6 last month from 49.8 in July, its lowest level since July 2009. Economists are worried that the looming fiscal cliff could deter businesses from spending in the upcoming months. "As I look at this and try to find some rays of sunshine, it's quite difficult," Bradley Holcomb, chairman of the ISM survey, told Bloomberg News on a conference call. "I would characterize this as a sobering picture of U.S. manufacturing right now without any clear signs of immediate improvement."

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It's often said that a little bit goes a long way, and that will certainly be the case for U.S. manufacturing growth in 2011. Although most projections still call for slower improvement in the sector than in 2010, the estimates have been characterized as "less bad" than originally expected -and that could translate into increased profit prospects for investors.

The market gave evidence of that just last Tuesday (Jan. 4) when the major indexes shrugged off other concerns and moved nicely higher in response to a larger-than-expected 0.7% rise in November factory orders, which had been forecast to fall by 0.1% according to a Thomson-Reuters survey of economists. Orders excluding the volatile transportation sector also posted their biggest gain in eight months.

Analysts characterized the numbers as "pointing to underlying strength in manufacturing." That bodes well for the greater economy, since U.S. manufacturers employ nearly 12 million people, or 9% of America's work force, and add $1.6 trillion annually to the U.S. economy, roughly 11% of gross domestic product (GDP).

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Last week we talked about Singapore and Thailand - two Asian economies that are quietly taking off. Today I want to add to those thoughts with a few more key points that opportunistic U.S. investors should know about Thailand, in particular.

Over the weekend, the Thai currency, the baht, rose to its highest level since 1997 due to an improved outlook for economic growth and expectations of more investor inflows. A current-account surplus of $5.42 billion this year through July and the fact that the Bank of Thailand has raised its benchmark interest rate twice this year have also helped the baht post the second-best performance among Asia's most-traded currencies excluding the yen.

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You know about China, India, and maybe even Korea, but there are two other Asian economies making waves in the South China Sea.

I'm talking about Singapore and Thailand.

While the U.S. economy would be really lucky to poke along at a 3% annualized rate this year and next, the fast-growing countries on the other side of the globe are ripping higher.

Regional analysts surveyed by Bloomberg News survey said they see Singapore expanding at a record pace this year of 14.9% due to improving demand for the city-state's exports. That's up from an estimate of 9% published three months ago. Singapore's economy relies on trade, finance and tourism. Its central bank said the surge would be led by a 29% expansion of manufacturing.

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Consumer spending in the United Sates was flat in June and personal savings were the highest in a year, underscoring how unemployment continues to hamstring the U.S. economic recovery.

Separately, U.S. factory orders fell by more than expected in June from May, and pending home sales continued to plunge as the expiration of a government subsidy for first-time homebuyers depressed housing market activity.

Taken together with the gross domestic product (GDP) data for the second quarter, the latest string of reports shows a U.S. economy that is drawing closer to a double-dip recession.

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We all know the economy has a tough row to hoe… We're facing severe unemployment. Almost 50% of those unemployed have not been able to find a job in six months. We've also seen huge bankruptcies over the past two years, such as General Motors, CIT Group and Lehman Brothers, and more than 100 banks […]

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The China manufacturing sector expanded at the slowest rate in 17 months in July, showing the government's efforts to tighten lending is weighing on the country's economy. But the Asian juggernaut is still posting strong enough growth to keep the rest of the world out of a "double dip" recession.

The HSBC China Manufacturing Purchasing Managers' Index released Sunday showed activity fell to 49.4 in July from 50.4 in June. A reading above 50 signals expansion, indicating manufacturing activity actually contracted for the first time since China's economic recovery began.

The HSBC PMI's reading was the first below 50 since March 2009. Measures of output, orders and export orders all showed contractions. Another measure, the official government PMI released yesterday (Monday), fell to 51.2 in July from 52.1 in June, the third straight month it has declined.

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Unemployment figures released Friday confirmed that the U.S. economy is still recovering, but they also showed it will take years to replace the 8 million jobs lost during the Great Recession.

And until meaningful hiring takes place, consumers are unlikely to loosen their purse strings, the key to putting the economy back on track to full recovery.

Employment fell in June for the first time this year, reflecting a drop in federal census workers and a smaller-than-forecast gain in private hiring.

Payrolls declined by 125,000 as the government cut 225,000 temporary workers conducting the 2010 census, Labor Department figures in Washington showed. Economists projected a decline of 130,000, according to the median forecast in a Bloomberg News survey. Private employers added 83,000 to their payrolls.

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Before this month, chances are pretty good that you'd never even heard of Taiwan's Foxconn International Holdings (PINK ADR: FXCNY). And yet, Foxconn is one of the world's most important manufacturers.

Given that the formerly anonymous giant is now at the forefront of the zooming escalation in labor costs that's currently taking place in Mainland China - and given the enormous implications of the inflationary pressures that will result - chances are excellent that Foxconn will have a bigger effect on the world economy this year than even BP PLC (NYSE ADR: BP).

If that weren't enough, China's decision to let the yuan appreciate against the U.S. dollar will actually magnify this impact: If the Chinese currency strengthens, then the yuan-denominated wage increases will have an even-more-inflationary effect on the cost of China-made goods selling at your local Wal-Mart (NYSE: WMT).

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Recent reports show U.S. consumers are spending again; some are actually even ditching the whole discount mentality in favor of luxury brands, while others are making long-delayed big-ticket purchases.

Individual spending rose for the sixth consecutive month in April, this time by 0.6%, or $36 billion. Personal income was up 0.3%. U.S. gross domestic product climbed at a 3.2% annual rate for the first three months of 2010, and U.S. factory output has risen.

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A string of government reports show that the American consumer is making more money and spending again, providing impetus for a sustained economic recovery.

Personal income jumped 0.3%, or $32.3 billion, in April following a 0.1% rise the month before. The Commerce Department said individual spending rose 0.6%, or $36 billion, last month, the sixth consecutive month spending has increased. Both figures matched estimates from economists surveyed by Briefing.com.

Consumer spending makes up about 70% of the U.S. economy. Economists are keeping a close eye on income and spending because so far, this has largely been a jobless recovery.

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Corporate profits appear to have returned in full, manufacturing is picking up around the world, commodities prices have rallied and the Standard & Poor's 500 Index is up about 60% since last March.

That makes a pretty compelling case for what some analysts are calling a "V-shaped" recovery. But even with all the momentum the economic recovery has accrued, that kind of talk may be a bit premature.

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The world's factories are churning out products at record rates, fueling the global economic recovery at a faster pace than thought possible just a few months ago.

The latest figures show factory output is growing at a record rate from the United States to China to Europe and beyond. And as manufacturing expands, economists expect the world's economies to continue to expand, creating jobs and putting money in consumer pocketbooks.

As long as companies have plenty of cash to finance expansion, output from the world's factories should continue to grow, according to Money Morning Contributing Writer Shah Gilani, who recently launched the Capital Wave Forecast, a new trading service based on capital flows.

Recent surveys show U.S. companies are sitting on almost $1 trillion in cash.